Disney stock falls after it unveils plan to double theme park spending
Disney’s stock tumbled more than 3% on Tuesday after the Mouse House revealed it will nearly double spending on its theme parks and resorts business.
Disney said on Tuesday it plans to spend about $60 billion over the next 10 years building out the lucrative but capital-intensive businesses, according to an SEC filing.
The entertainment giant said it has over 1,000 acres of land it could develop and cited the growth it has seen over past years from investing in theme park rides, cruise ships, and other attractions tied to its blockbuster movies and characters.
Shares of Disney on Tuesday were recently trading at $81.89, off 3.7%.
The company is currently hosting a three-day gathering, which kicked off on Monday, for Wall Street analysts at its Disney World resort in Orlando, Fla.
There, CEO Bob Iger and parks chief Josh D’Amaro provided details on the accelerated pace of spending, which calls for “investing in expanding and enhancing domestic and international parks and cruise line capacity, prioritizing projects anticipated to generate strong returns,” Variety reported.
The Burbank, Calif.-based firm said its parks business has experienced growth “following previous periods of significant investment,” adding that it also “will explore even more characters and franchises, including some that haven’t been leveraged extensively to date, as it embarks on a new period of significant growth domestically and internationally in its parks and resorts.”
The aggressive 10-year plan to expand Disney’s parks and cruises comes as the company is wrestling over what to do with its linear TV business, with networks like ABC and ESPN slammed by continued cord-cutting, even as its Disney+ streaming app continues to lose money.
The parks division, which Iger has described as a “tremendous business” for Disney, has helped cushion those other sluggish units and has expanded at a combined annual growth rate of 6% since fiscal 2017.
The company added that the parks division also generated $32.3 billion in operating income over the last 12 months, according to a presentation included in a regulatory filing.
Iger recently said the company is evaluating “non-core” TV assets, including ABC, FX, and ESPN, among others. Although the CEO has tried to walk back those comments, explaining that Disney is examining its options, sale rumors have kicked up.
Last week, ABC News staffers were jolted by a report that local TV media giant Nexstar was in preliminary talks with Disney to buy ABC.
“While we are open to considering a variety of strategic options for our linear businesses, at this time The Walt Disney Company has made no decision with respect to the divestiture of ABC or any other property and any report to that effect is unfounded,” a Disney spokesperson said in response to the report.